I had to Short Sale / Foreclosure now What?

Many of my clients fell on hard times when the market crashed and wonder what thier options are when trying to recover from hardships. Below are the fedral guidelines on the time limits after you have had a short sale or foreclosure.

If you have documented extenuating circumstances, this will have a direct bearing on the number of years you will have to wait to get a conventional loan.

What is Documented Extenuating Circumstances?
Fannie Mae allows for extenuating circumstances such as:

- Death (not yours, of course)
- Illness
- Job Transfer
- Accident Resulting in Severe Injury
- Generally, extenuating circumstances are things that happen beyond your control, which dramatically affect your ability to continue making payments on your mortgage.

With documented extenuating circumstances, the waiting period is less than without. I'm sorry to say that being unable to afford an increase in payment due to an interest rate increase on your adjustable-rate mortgage is not considered a circumstance beyond your control.

Waiting Period to Buy After Foreclosure

The waiting period is 5 years up to 7 years.

Buying After a Foreclosure With Extenuating Circumstances

The waiting period is 3 years up to 7 years.

Buying After After a Deed-in-Lieu of Foreclosure ( Giving the home back to the Bank )

The waiting period is 4 years up to 7 years.

Buying After a Deed-in-Lieu of Foreclosure With Extenuating Circumstances

The waiting period is 2 years up to 7 years.

Buying After a Short Sale

The waiting period is 2 years. However, if a seller does not have a 60-day late pay, that seller may immediately buy another home. It's a reason to stay current on your payments while the home is on the market as a short sale.

However, to answer your particular question, if you have no extenuating circumstances, you will need to wait four years from the date of completion, meaning the date your deed-in-lieu of foreclosure was recorded.

In addition to the waiting period, some loans require 10% down and a minimum FICO score. The home you purchase must be your principal place of residence, not a rental nor a vacation home.

Fannie Mae constantly issues new guidelines. The above policies are in effect for loan applications submitted after August 1, 2008.